Three ways the NHS can save on imaging equipment
Imaging Longer-term thinking and clever buying policies can help NHS trusts acquire the latest imaging equipment while potentially reducing outlay.
The NHS spends more on imaging equipment than any other type of equipment. A new MRI scanner can cost anywhere from £750,000 to £2 million, while CT scanners average £1.5 million. Service contracts can add up to 25% of the total life cycle cost. With such high costs, the NHS procurement system for imaging technology must be as smart as possible.
Jason Lavery, VP for Capital Solutions at NHS Supply Chain, the division of DHL which procures 80% to 90% of NHS imaging equipment, says: “The NHS is doing the best it can but trusts tend only to replace imaging equipment when absolutely necessary, so the average age of the installed equipment is growing”.
This can be a false economy. Lavery says: “Technology has improved over the last five years while costs have generally remained static. Newer equipment delivers better images faster, delivering better patient outcomes and fewer repeated tests, which increase costs.”
Formerly trusts generally paid for new imaging equipment out of their yearly budgets but more now use other options, such as loans, commercial leases or managed equipment services, where third party companies supply and maintain the equipment. Many of these longer term arrangements can cost more than capital purchases but the current constraints on the NHS Capital budget deem them a necessity in many areas
Lavery suggests 3 ways that the NHS could save on imaging equipment:
1. Aggregation: around 200 NHS trusts which formerly bought equipment separately are now using aggregated buying.
“Utilising a Department of Health Capital Equipment Trading Fund, we are aggregating trusts' demand and placing orders in bulk for, say, 20 CT scanners, instead of one at a time. We support radiologists and radiographers to pull equipment specifications together and try to co-ordinate procurement and finance across NHS regions. Since the Trading Fund started in April 2012 we have aggregated £0.7bn of medical equipment delivering average price reduction of circa 10%."
2. Thinking longer-term: “Buying service agreements alongside equipment can save money, as can buying service agreements over several years,” says Lavery.
“A £50m pilot scheme we conducted last year involved combining purchases of MRI and CT scanners with seven-year service contracts and leasing these to the NHS with seven-year low-cost interest deals. Savings averaged 16%.” The initial outlay to manufacturers was funded from the Capital Trading Fund. “Securing a longer term source of low cost finance to support equipment and maintenance aggregation and financing could extend this procurement model,” says Lavery.
3. Strategic investment programmes. “Currently there may be demand for 40 NHS scanners one year but only 10 the next. Certainty about demand means better deals, so a rolling procurement system, where say, 20, are bought each year could save money,” says Lavery. Pilots are running in a number of Trusts using decision support tools to help formulate longer term, more structured replacement plans based on optimum time to replace, we are hoping this will lead to a replacement blueprint that the NHS could adopt.
Lavery adds: “Faced with funding constraints NHS trusts often face a complex juggling act when replacing aged imaging technology. The Capital system should provide for the NHS to buy service at the same time as equipment and find more low-cost finance routes. With a new approach and access to more flexible financing trusts could spend less on buying better imaging equipment – saving money and improving patient care.”